10 Steps to Open a Managed Forex Account
In today’s world, the forex market has exploded on to the scene, carrying with it an infinite potential for growth. Capturing the attention of television and Internet users worldwide, it seems as if the word’s spreading faster than ever. Despite this growing interest, there’s NOTHING on the Internet explaining the ENTIRE process for opening a managed forex account. Just like everything else we do, we figured we’d play the role of pioneer, discussing this topic in GREAT DETAIL.
In this article, we’ll tell you how to find a managed forex trader while providing you tips for the investment process. In addition, we’ll outline steps on how to open a managed forex account, and succeed for years to come. First things first, let’s cover the steps to opening a FX investment account. Scroll down and take a look!
Steps to Open Managed Forex Accounts
1. Define your FX Goals and Risk Tolerance: Before investing with a forex trader, always define your MAX risk upfront. If you know what you’re willing to lose, you can view the track records of different FX traders and find the one that meets your risk tolerance. Also, you MUST define your goals when you’re seeking a forex investment. If you are looking for high yields, then be prepared to risk more as well. On the other hand, if you’re looking for lower yields, try to find a FX trader with a history of 2+ years. Either way, unless you align your investment with your personality and goals, you’ll ALWAYS end up disappointed.
2. Create your Plan to Search for FX Traders: Once you’ve defined the goals and risk of your FX investment, create a plan to start searching for traders. Though you can find a number of forex websites on the Internet, you’ll only find the best traders by networking aggressively. This won’t happen from you hiding behind a computer screen. Don’t be shy, grab the phone and start searching for the “golden egg”. Remember, Googling can do wonders, but the best traders do NOT advertise on the top of the search engines. The truth is, those who settle for the first managed forex investment find they’re usually disappointed in the end.
3. Find Several FX Traders if Possible: During your searches on the Internet you may become frustrated, but here are a few tips. By searching the web for discussion forums, managed forex companies, FX brokers, clearinghouses, financial directories, or blogs such as this, you’ll ALWAYS uncover good FX investments. The key is creating a solid search plan, as we mentioned in the prior step. By doing so, you can aggressively search for managed forex investments, devoting your time ONLY to opportunities that align with your risks and goals.
4. View Contracts for Each FX Trader: Though most contracts for FX traders are similar, it’s always good to analyze the agreement in detail. First, take a look and see who the contract is with. In many cases, you’ll have a contract with the FX broker, and the trader will ONLY have limited power of attorney to trade the account. In this case, research the FX broker and make sure they’re legit. In addition, make sure the FX trader has a contract which guarantees a specific MAX draw down % for your account. This will help protect you from disaster, or legally recoup losses if the trader breaks the contract. On the other hand, if you have a contract with a FX fund or trading company, make sure you feel comfortable with the contract sections covering liability and draw downs. If you’re content with the contract verbiage, it’s now time to complete due diligence on the FX trader.
5. Complete Due Diligence on All FX Traders: To research a managed forex trader, you need to follow a few basic steps. First, you MUST speak with the trader and a reference who can attest to their success. By having a trusted reference and a sense of confidence in the FX trader, you can feel comfortable enough to spend time digging deeper. Second, you should ask the forex trader for a track record showing a history of their performance. When you ask them for the track record, also ask them if there’s a third party who can verify their yields are accurate. If the yields are audited or you have a credible client reference, you can once again dig deeper. Lastly, after you have completed the first two steps of due diligence, perform a criminal background check. If that comes up clean, “Google” every keyword related to their name, company and geography, to see what you find. Once you’ve completed these basic steps, you should have a far better chance of finding a FX investment that meets your goals.
6. Choose the Best FX Trader to Invest with: After you’ve completed due diligence on the few forex traders that are still appealing, it’s time to make the decision. Though we know human instinct is to go with the highest yields, remember, no investment is worth losing sleep over. If you consider yourself to be a smart investor, and NOT a gambler, you’ll choose a trader that matches your risk profile. In short, if you’re someone who wants returns that exceed the equity markets, look for a FX trader earning 50%+ with a stable track record of 2+ years. If you are looking for higher yields, and have capital to risk, search for FX traders making 100%+ per year. Remember, if you can find a trader with yields exceeding 100%, they’ll usually also have a few big losses on their track record. By assessing these losses, and confirming the yields are REAL, you can make the right choice when it comes time.
7. Complete Contract and Other Documents: Once you’ve chosen the forex trader you’re investing with, it’s time to do your part. In most cases, the process of completing FX account opening documents is rather easy. Typically, you’ll have to fill out a contract which includes risk disclosures, duties of both parties, and other legal verbiage. In addition to the contract, you’ll also have to provide identification such as a passport or state ID. For some managed forex accounts, you may even have to get a passport notarized and send in with the rest of the documents. After you get all of these documents completed, all you need is to do is sign the LPOA (Limited Power of Attorney Agreement) and you’re ready to roll.
8. Receive Account Number and Wiring Instructions: Once the FX broker or clearing house has received the account opening documents, they will generate an account number. This account number is associated with the investor’s name and information, and is also tied to their segregated trading account. As soon as the number is generated, it ‘s sent to the forex investor with wiring instructions on how to fund the FX account. Typically, this is a segregated account ONLY in the name of the investor, and in most cases, the investor sends the wire with “further credit” to themselves. This ensures funds are transferred from one account of the investor to another they control, never putting the money at risk for fraud.
9. Wire Funds into New FX Trading Account: After the investor has received the wiring instructions, it’s time to step it up and send the money. In a lot of instances, new forex investors get skittish right before they’re going to fund the account. The fact is, if you’ve completed steps 1-8 properly, you’ll have NO reason to be anything but excited. Remember, all investments have risk and your job as an investor is to trust your intelligence. If you’ve made the choice to invest with a trader, and have completed the contract, SEND the MONEY! If you don’t, you may burn your bridge to wealth due to an unsubstantiated paranoia.
10. Forex Trading Starts the Next Best Day: At this stage, it’s time to sit back and relax before you start to analyze the account. Usually, domestic wire transfers are immediate, and international wires take 3-5 days. Once the wire has hit your FX account, you’ll be notified with a statement from the FX broker or clearing house. This statement will show your opening balance, and will serve as a receipt for your initial investment. At the same time you’re notified, the trader is told the funds have been transferred “onto their books”. As soon as the funds “hit the books” of the forex trader, they start trading as soon as the market indicates it’s a good opportunity.
Though it may seem like quite a process to open an account, it rather simple and can usually be accomplished in 2-3 days. Think about it, within 72 hours you can be profiting on money that’s just sitting there, earning little to no interest. Sounds pretty intriguing, but it can’t be that easy, right?
Once you’ve opened the managed forex account, you CAN get excited, but DON’T look too far ahead. The reason is, you always need to be COMPLETELY happy with your trader. Take a minute and ask yourself, are the yields satisfactory? Is the communication good? Is everything transparent? How are they about withdrawing money? By answering these questions several times over the course of the first year, you’ll know if you found the “golden egg” or just ANOTHER oasis.
In summary, it’s ALWAYS important to implement these steps during any forex investment. Whether you’re starting to look for a FX trader, choosing amongst several managers, or you’ve already invested, you MUST always stay sharp. Investing in managed FX is not a decision you make “off the cuff”. Successful investors understand every step AND the purpose behind them. Hopefully this article has taught you how remain diligent in forex investments, because if It hasn’t, the only thing that can is LOSING your money….
InsideTrade LLC Staff
Phone: (949) 444-2111